Bank of Korea Governor Shin Hyun Song said further gains in the won would be desirable, pointing to stronger household purchasing power from the currency’s substantial appreciation since the central bank shifted to tighter monetary policy.

“We will keep a restrictive stance of monetary policy until we’re confident that inflation will converge to our target, and in a timely way,” Shin said Tuesday during a discussion with Krishna Srinivasan, director of the International Monetary Fund’s Asia and Pacific Department, at the IMF and World Bank annual meetings in Bangkok.

A stronger won has shifted the balance toward the domestic economy, helping ease disparities in what Shin described as a “K-shaped” economy. Inflation, the exchange rate and financial stability all point policy in the same direction, making the trade-offs facing the BOK less difficult than usual, he added.

The remarks came ahead of the BOK’s policy decision Oct. 22, following consecutive quarter-point increases in July and August that brought the benchmark rate to 3%. Shin previously signaled that further tightening would be gradual as policymakers assess the impact of higher borrowing costs.

Shin also said the BOK would review its six-month dot plot, introduced in February under former Governor Rhee Chang Yong, after accumulating at least a year of experience. No timetable has been set, and any review would take place next year or later, he added.

The projections have helped communicate policymakers’ thinking, Shin said. In August, they allowed the BOK to provide a sense of the slope of its monetary policy response alongside the rate increase, which he said had a beneficial effect on long-term yields. Still, guidance needs to preserve flexibility to respond to new information.

“We’re trying to look for exactly that sweet spot between forward guidance too much and too little,” Shin said.

That flexibility may prove important as policymakers navigate competing forces shaping the domestic economic outlook. The AI boom is more than offsetting the drag from the Middle East war, but the two forces are combining to intensify inflation, Shin said. Stronger demand is adding to the cost pressures from the conflict, leaving both headline and core inflation likely to remain above the BOK’s 2% target for some time.

The IMF on Tuesday raised its forecast for South Korea’s growth this year to 3.3%, up 0.7 percentage point from July, as semiconductor-led demand outweighed the war’s negative effects. That matches the BOK’s latest projection after the central bank in August sharply raised its 2026 growth forecast to 3.3% from 2.6%. The IMF also lifted its 2027 projection to 2.8%.

South Korea’s exports more than doubled in September from a year earlier to a record $120.9 billion, powered by a 263% surge in semiconductor shipments. Inflation eased to 2.9% from 3.1% in August, remaining above the central bank’s target.

Shin, who spent more than a decade at the Bank for International Settlements before taking the helm of the BOK, said tighter policy should also slow the buildup of financial vulnerabilities. The central bank’s financial vulnerability index is rising, but he expects it to peak at a level that would not cause alarm.